Poll of the Day Recap: Mo-Mo Meltdown?

Is that fear in the air? The sound of bubbles popping?

After notching new record highs recently, U.S. stocks have been falling with the S&P 500 yesterday posting its biggest three-day drop in two months (down -4.12% year-to-date). The action in the Nasdaq was anything but pretty with recent highflyers being brought down to earth.

Is a bigger correction at hand? We wanted your take on the market in today’s poll. So we asked: Do you think the S&P 500 will correct 10% or more by July 4th?

At the time of this post, the clear edge goes to the bears with 52% responding YES; 48% saying NO.

One responder who voted YES noted that, “the US economy is slowing more than consensus would like to admit, [and] consequently too many people [are] leaning the wrong way.”

Some YES voters said they believe the S&P 500 would only correct if earnings are as bad as predicted. And a few clarified that though they voted YES, if companies lower the bar, and then beat, then all bets are off and the “game can continue.”

One voter explained, “What should be working in terms of growth style factors isn't working. Slow growth assets continue to lead as the macro data comes in weaker. Bubbles popping. Might need to do more research since…Gartman is bearish...”

Speaking of Gartman, several comments referenced the CNBC market guest Dennis Gartman, editor of the Gartman Letter, who said in a recent interview that he’s getting out of equities and sticking with cash and gold to ride out the recent pullback – "I got scared," he said.

“Gartman’s scared, so we just bottomed out,” wrote one NO voter.

And another: “Dennis Gartman just said he's scared and getting out of stocks and into cash. As clear a buy signal as any.”

Though one responder admitted they thought a correction would happen a long time ago, if earnings do reset, as another comment puts it: "Unleash the Krak…Yellen!"

Cartoon of the Day: Over the Moon

REPLAY: 2Q14 MACRO INVESTMENT THEMES CALL

Earlier today the Hedgeye Macro Team, led by CEO Keith McCullough, hosted their quarterly Macro Themes conference call in which they detailed their Top 3 Global Macro Investment themes for 2Q14. The Replay and Presentation Materials can be accessed via the links below.

Q2 2014 MACRO THEMES OVERVIEW

#ConsumerSlowing: The cyclical increase in consumer spending growth from the 2009 lows is under pressure. Rising food prices and a stagnating USD continue to squeeze average Americans on the margin. Given the potential for further USD depreciation and a continuation of global commodity inflation as a real macro risk, we think U.S. consumption growth will slow as it bumps up against difficult compares heading into 2Q and beyond.

#StructuralInflation: Following up on our cyclical #InflationAccelerating theme, we are focusing now on structural inflationary pressures embedded in the U.S. economy. Much like in Japan, zero percent interest rate policy has fueled a broad-based portfolio re-balancing away from financing economic growth to reach for additional yield in slow-growth assets. This is fueling systemic underinvestment in both human and physical capital. However (unlike in Japan), the USD's long-term downward trend adds an additional layer of inflationary pressure due to an increased reliance on imported goods and services amid capacity constraints abroad.

#HousingSlowdown: We have been big housing bulls over the last 18 months. But the party is ending. Asymmetry in being long has flattened. Price follows demand on a lag and demand is slowing as affordability declines, regulatory changes drag on liquidity, and institutional interest ebbs. We walk through our updated view on the Supply/Demand/Price dynamics prevailing in the housing market and our forward outlook for prices.

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Wal-Mart Finds Room on India’s Couch | $WMT

"Wal-Mart Stores Inc. is launching e-commerce and adding wholesale stores in India to sell to small businesses after shelving its hopes last year to open retail stores in the country. The world's largest retailer by sales plans in the next four years to open 40 to 50 additional wholesale stores in India, adding to its current 20, said Scott Price, chief executive of Wal-Mart's Asia division, in an interview Tuesday."

"Mr. Price said the Bentonville, Ark., retailer's India-based cash-and-carry wholesale business will also roll out online sales this summer. He said the model will start small, with only one wholesale store posting its products for sale online. Mr. Price added that the store's staff will deliver the goods to the mom-and-pop stores that order them as much as 40 kilometers (about 25 miles) away, he said."

Takeaway From McGough:

The move to open wholesale stores is brilliant. The reality is that India is a massive marketplace made up of hundreds of thousands of mom-and-pop retailers. The biggest risk for Wal-Mart is that it went in with a substantial retail business, and faced massive revolt from the masses who don't want to be put out of business by the big American price cutter. But becoming a buying agent for the moms-and-pops? That makes a boatload of sense.

Editor's Note: This is a complimentary research excerpt from Hedgeye Retail Sector Head Brian McGough. Follow McGough on Twitter @HedgeyeRetail.

Materials & Dial-in for Q2 2014 Macro Themes Conference Call

Hedgeye's Macro Team will be hosting our highly-anticipated Quarterly Macro Themes conference call today at 11:00am EDT. Led by CEO Keith McCullough, the presentation will detail the three most important macro trends we have identified for the quarter and related investment opportunities.

CALL DETAILS

Q2 2014 MACRO THEMES OVERVIEW

#ConsumerSlowing: The cyclical increase in consumer spending growth from the 2009 lows is under pressure. Rising food prices and a stagnating USD continue to squeeze average Americans on the margin. Given the potential for further USD depreciation and a continuation of global commodity inflation as a real macro risk, we think U.S. consumption growth will slow as it bumps up against difficult compares heading into 2Q and beyond.

#StructuralInflation: Following up on our cyclical #InflationAccelerating theme, we are focusing now on structural inflationary pressures embedded in the U.S. economy. Much like in Japan, zero percent interest rate policy has fueled a broad-based portfolio re-balancing away from financing economic growth to reach for additional yield in slow-growth assets. This is fueling systemic underinvestment in both human and physical capital. However (unlike in Japan), the USD's long-term downward trend adds an additional layer of inflationary pressure due to an increased reliance on imported goods and services amid capacity constraints abroad.

#HousingsSlowdown: We have been big housing bulls over the last 18 months. But the party is ending. Asymmetry in being long has flattened. Price follows demand on a lag and demand is slowing as affordability declines, regulatory changes drag on liquidity, and institutional interest ebbs. We will walk through our updated view on the Supply/Demand/Price dynamics prevailing in the housing market and our forward outlook for prices.

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